Some tip jar donations might not be 'charitable'

February 21, 1998|By LAURA ERNDE

Some tip jar donations might not be 'charitable'

Washington County clubs have given thousands of dollars of tip jar gambling profits to political organizations, the National Rifle Association and even back to their own members in the name of charity.

Those practices appear to violate the rules of the Washington County Gaming Commission, which has hired accountants to scrutinize all the clubs' charitable donations, Director Kathy Sterling said.

The Owl's Club in Hagerstown, for instance, threw parties for their own members, crediting expenses of more than $4,000 as charitable donations.

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Other private clubs wrote off $100 each time a community group, even if it was not a charity, used their meeting rooms, Washington County Gaming Commission records show.

Clubs would lose control over such donations if a proposed amendment to the tip jar law passes the Maryland General Assembly.

They would be required to give 15 percent of their tip jar profits to the county Gaming Commission, which distributes the money to the fire and rescue association and local charities.

Now, the clubs are required to give half of the required 15 percent of their tip jar profits - or 7.5 percent - to the Gaming Ccommission for distribution and the other half to charities of their choice. Their own donations can be made in cash or through in-kind contributions, such as letting a charity use a meeting room.

If the law is passed, it could mean an additional $590,000 next year to charities funded through the county Gaming Commission.

The Gaming Commission already estimates that it will distribute $1.86 million in profits this year from the $1-a-ticket, paper gambling game that in Maryland is primarily played in the western part of the state.

That includes profits from tip jar gambling at bars, which are required to give 50 percent of profits to the Gaming Commission.

The clubs did make many legitimate gifts to charity under the requirements of the county tip jar law, records show.

Funkstown American Legion and its auxiliary gave away $11,500 in scholarships, which are allowed under the tip jar guidelines.

The club also gave $1,000 to CASA, which runs a women's shelter, $1,500 to the Washington County Agricultural Education Center and hundreds of dollars to charities like Community Free Clinic and the YMCA.

Clear Spring American Legion gave away more money than they were required, including $3,500 to the Clear Spring Little League.

But there were also many questionable donations discovered by accountants at Smith Elliott Kearns & Co. Hagerstown, hired at a cost of $14,800.

Some clubs actually gave money back to their members.

Among those donations were parties thrown by the Owl's Club, 25 W. Antietam St., Hagerstown.

The most expensive was $420 for a New Year's Eve party, records show.

Owl's Club President John H. Eader Sr. said club officials believed they were following the rules and questioned whether the county even understands the sometimes confusing guidelines.

"If you ain't allowed to give to your members, I don't know why you'd be allowed to give to anything else," said Eader, who said he supports changing the law to require turning over a flat 15 percent to the Gaming Commission.

Morris Frock American Legion on Northern Avenue and Washington County AMVETS, 770 Frederick St., both reported donations to their own ladies' auxiliaries, records show.

That is not allowed under Gaming Commission rules, said Director Sterling.

The two lawmakers and the club's treasurer have said the use of the room was not a political donation because it was not a campaign rally. The Legion was providing a community service, they said.

But Sterling said political gifts are not supposed to count as charitable donations.

Four veterans' clubs tried to get charitable credit for giving $1,598 to political organizations - the South County Democratic Club, Democratic Central Committee and the Democratic Club of Williamsport, records show.

Many clubs also tried to claim $100 a month for giving meeting space to community organizations that are not qualified charities.

The Boonsboro American Legion tried to claim $100 a month for giving meeting space to the Class of 1962, Local Union 7886, South County Gun Club and a card club.

None of those are nonprofit charities as required by the tip jar regulations, Sterling said.

Jack Tritsch, vice president of the Washington County Club Association, said the rules sometimes punish clubs that are trying to do good things for their communities.

There aren't a lot of nonprofits for clubs in rural towns like Clear Spring and Boonsboro to give to, he said.

Also, clubs are not allowed to count gifts to residents who are homeless due to fire, he said.